Tag: IMF

France urges Lebanon to form a new government without further delay
Middle East & Africa

France urges Lebanon to form a new government without further delay

France urges Lebanon to form a new government: The deadline for framing a new government in Lebanon was missed due to the pandemic and the Beirut Port blast. France has urged Lebanon to “accelerate the development of a new and effective government, acknowledged by every political group. A new government is needed to reform and give appropriate leadership amid strains, covid-19, and major economic crises. 

Patrick Durel, The adviser to president Macron for the issues of the Middle East and North Africa, held a series of conferences on Thursday and Friday, with authorities and the tops of the eight parliamentary coalitions, including the delegate of Hezbollah to form a new government asap.

In September, President Michel Aoun also said that the crisis-hit nation could be going to “hellfire” if a good and new administration was not framed soon, recommending it would require a miracle for that to occur now. 

The warning comes as the nation battles to contain an escalating economic and financial crisis that worsens the nation’s economic situation, just as worries of a surge in Covid cases and deaths impact Lebanon. 

The political standstill has subverted a French initiative drove by President Emmanuel Macron for a Lebanese administration of autonomous authorities to enact urgently to bring reform intended to deliver the nation from its ongoing crises. 

On Nov 16, Lebanon’s caretaker FM Ghazi Wazni stated that if the nation’s elite class kept on postponing the forming of the new government and we don’t get financial aid soon, it would be the end of Lebanon, he added.

Wazni backed Macron’s initiative, who promised global financial help to Lebanon in return for anti-corruption reform in the nation. Lawmakers presently haven’t able to propose any of them. 

“President Macron stated ‘we’ll provide you some oxygen, we’ll help you to come of this mess’, or else, this monetary and social situation will continue to intensify. The effect will be on the security, strength, and fate of the nation,” Wazni added. 

The negotiations with the International Monetary Fund (IMF) for financial aid were postponed thus, even though contact proceeds, Wazni added. 

However, for a long time, the PM assigned and Saad Hariri have been trying to negotiate with the political parties about how to divide ministries, but due to the pandemic and the port blast has hit the nation badly.

Critics state that despite public proclamations of help for Macron’s drive and reform, Lebanon’s government officials have returned to obtain as much influence as plausible.

MENA region to attract increasing foreign capital inflows
Middle East & Africa

MENA region to attract increasing foreign capital inflows

IIF projects GCC nations to drive external capital inflows in MENA region amid demand for hard bonds

COVID-19 has presented multiple shocks for emerging markets with collapsing capital inflows and domestic and external demand. Amid ongoing efforts to recover from pandemic repercussions, the Institute of International Finance (IIF) has stated that capital inflows in the Middle East region are anticipated to remain high. Speaking to Gulf News, IIF Chief Economist for MENA region Garbis Iradian said that the institution is expecting non-resident capital inflows to the MENA countries to increase up to $177 billion in 2021, which is significantly equivalent to 6.6 percent of the GDP of the region. 

As per the report, hard currency bond issuance of GCC countries is playing a significant role in increasing the capital inflows, adding that countries like the UAE, Saudi Arabi, Oman, Bahrain and Qatar have issued hard currency bond worth $91 billion so far in 2020, as compared to a total of $99 billion in 2019. 

At the same time, GCC’s funding needs are also projected to increase in 2021 even as fiscal deficits have narrowed. Gulf countries are driving the requirements for high-quality assets which will result in the growth of gross public external financing of the region to approximately $100 billion by next year.

Meanwhile, Foreign Direct Investment (FDI) continues to remain low in MENA countries in the backdrop of economic repercussions of the COVID-19 pandemic. It is prominently concentrated in the oil and gas sectors in the region, with the UAE and Egypt standing high as the highest FDI recipient in the MENA region.

As per an IMF report in January 2020, the Middle East and North Africa region has been witnessing high and stable gross capital inflows in the last years compared to other emerging markets, providing a boost to investment and job creation in the countries. 

After MENA countries integrated into the global capital markets, their capital inflows surged to over $155 during 2016-2018.

However, the UN organization has also raised concerns about the increasing global economic risks that would put MENA countries in a vulnerable position due to shifts in fiscal deficits, debt burdens and financial buffers. The IMF had recommended MENA countries to improve their policy framework in a bid to strengthen their resilience to volatile capital flows and mitigate the risk of outflows. 

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